What You Need to Know to Launch a Successful Amazon Business in 2017

Andrew Youderian has built and sold multiple successful ecommerce businesses and runs Ecommerce Fuel, a private community for 6- and 7-figure ecommerce entrepreneurs.

On this episode of Shopify Masters, he'll be joining us to talk about how you can set yourself up for success when launching a business on Amazon, including recent changes to the marketplace and what they mean for ecommerce entrepreneurs in 2017.

I think the days of being able to throw up a product that’s not differentiated, that’s not unique, and be able to make it—make money—are over.

Edit: This interview has been updated, and this note has been added, to clarify that listing your products at a lower price on your own Shopify store vs. your Amazon listing is against Amazon's Terms of Service.

Transcript:

Felix: Today, I’m joined by Andrew Youderian from eCommerceFuel.com and the eCommerceFuel podcast. We’ve had Andrew on previously to talk about his experience starting and selling e-commerce businesses and his most recently sold store Right Channel Radios. Definitely recommend checking out the previous episode with him. We went to lots of great topics again for anyone that’s really interested in hearing what it’s like to build and eventually sell a business, I think that’s great episode for you to listen to. Today, we’re going to have him come on to talk specifically about Amazon and to hear his tips and advice and his experience and working with so many other entrepreneurs that are selling on Amazon. Have him come on and talk about what it’s like and how to build a successful business on Amazon.

Welcome, Andrew.

Andrew: Hey. Thanks, Felix. Appreciate you having me on.

Felix: Yeah, for sure. Tell us a bit more about your background for anyone that hasn’t heard that previous episode. Give us a refresher of all the businesses, all the e-commerce stores that you started, and your evolution through e-commerce as an entrepreneur.

Andrew: My background in e-commerce is I got in full-time in 2008, started a CB radio business called Right Channel Radios online. In 2010, started a second business called TrollingMotors.net. Again, e-commerce drop-shipping based. Sold those. Sold Red Channel Radios this year. Sold Trolling Motors a couple of years ago. I’ve started and sold a couple of e-commerce stores and then kind of along the way, started a community for high 6 and 7-figure e-commerce store owners. It’s called eCommerce Fuel. I’ve been running that for about 4 or 5 years now. That’s my experience in a nutshell in terms of e-commerce.

Felix: Cool. You obviously have a lot of exposure and have heard and worked with many different sellers that are selling on Amazon, that are not, that are different stages of their business on selling on Amazon. Based on what you’ve seen, what does success look like on Amazon? What should people expect if they open one of their sales channel into Amazon, maybe already have an existing store? What does Amazon do for a business?

Andrew: In terms of what it does for a business is it’s the biggest force in e-commerce in 2017. It gives you access to an enormous market of customers that are comfortable buying on the platform, that search for products on the platform. I think that there’s more, I’m trying to remember the stat for sure, but I think there’s more product searches started on Amazon now than there are on Google, which is crazy. Yes, I mean it gives you access to, in terms of what it could do for your business is it can just, it can blow up your business if you’re the right kind of fit for an Amazon, to use that platform. It can help you use scale in a really efficient manner. Especially if you’re using something like FBA, Fulfillment by Amazon, you can really dramatically increase your sales without having to increase your warehouse or your staff or your overhead or anything like that. Allows you to scale up with access to a massive marketplace is the big upside.

Felix: For any sellers that you see and approach Amazon and approach opening that up as a sales channel for the first time, do they have to approach selling differently or any other process in their business that they need to reevaluate prior to launching their or expanding into Amazon?

Andrew: Yeah. It’s not a great fit for everybody. I’d say Amazon’s a great fit for someone who obviously wants to grow their channel or business and has something unique to sell. You are on there competing with, because it’s such a massive marketplace, there’s a lot of competition there as well. If you’re just trying to re-sell someone else’s widgets that you can drop ship or even buy in bulk, chances are there’s going to be dozens, if not hundreds of other people trying to sell those exact same widgets. You leverage something like FBA on there where it’s really easy to run the operational side of the business, and you get into some pretty nasty price wars. One, you need to think about, am I bringing something unique to this marketplace? Because if you are, it’s an incredible way to move products.

The other thing is you need to think about Amazon has built a reputation, which is great if you’re a customer. It’s also great if you’re a seller, but you got to be careful that they put the customer number one. Unequivocally, number one. They have some pretty strict standards for how quickly you have to be able to respond to customer emails, what kind of things you have to accept as returns. The customer’s almost always right at Amazon. You got to get used to that a little bit.

You also have to get used to the fact that you’re building a business on someone else’s property, more or less, on someone else’s platform. You don’t own the customer. Amazon owns the customer. It’s great because you can really scale the business quickly and generate a lot of sales and cash flow. But long-term, it’s hard to build. You do have an asset you can maybe sell, but it’s a much riskier one because you don’t control the email list. You don’t control the domain, right? You’re not controlling the purchasing process, so there’s some dangers there as well. Those are the things, kind of the big things you need to be thinking about in terms of going to Amazon.

Felix: Got you. I like that you said you had to have something to sell. I think it’s an important thing also to note that there is a difference between being an inventor and being a business owner or an entrepreneur. I think maybe in the last 10 years or so, because there’s so much emphasis on people starting tech startups or tech-based businesses, there’s this idea that you have to come to the market with something completely brand new, every single time, in order to survive. Are you talking about unique as in like a product that doesn’t have a patent yet and you’re coming with something brand new or are there other ways to be unique other than to bring a whole new product to solve a problem?

Andrew: No, it doesn’t have to be … You, by no means, need to have a patent to build something on Amazon. What I’m talking about is selling without any kind of modifications or changes, existing products. I’m from the CB world. If I try to go and … We never got into Amazon when I owned my CB business because there were just, again, dozens of other people selling the exact same antennas that we were looking to sell, that had the exact same SKU from the exact same brand. Really, for awhile, there was a really big rush of people doing what’s called private labeling, where they go out, they buy a product, they wouldn’t make any changes to it. They buy it from a factory or a supplier, slap their brand and logo on it, throw it on Amazon. At that point, if it was a decent product and you could market it well, you could do pretty well. I think that’s getting quite a bit harder today, after we’ve had 2 or 3 years of a lot of people doing that.

At the same time, you don’t have to reinvent the space shuttle from scratch. I know a lot of people go out, look for products on Amazon or in the market that sell well but maybe have a couple aspects that people aren’t happy with or complain about it. Make a couple tweaks, which is much easier than completely re-designing the whole product. Then, put their brand on it and that can be a viable way to get a unique enough product off to make Amazon work.

Felix: Okay, cool. If anyone that is thinking about starting a business and going that route where they source a product that is not completely where they want it to be, based on what they’ve seen from customers, and then bring that on to Amazon, are there any research that you can do to determine what you should be changing about a product that you could buy, rather just slapping a label on it, actually make adjustments to it? How do you know what kind of adjustments you should be making to an existing product if you wanted to bring it into Amazon?

Andrew: Yeah, a couple of different ways. If you have an existing business, your current customer base is probably a fantastic first place to start. Chatting with them or if you’re running a business, you’re going to know the pain points that customers have. You’re going to know, if you look at your top five best-selling items and figure out what the problems people have with them or even if you’ve got a business, look at the last 30 people to buy X product and spend two or three days and call them up and … Might be a little awkward on the phone for the first 10 seconds or so, but say, “Hey, I know you bought this. You didn’t review it. Are you liking it? What could be improved with it?” That’s one way.

Another way is to go into Amazon or other places and look at the reviews. See what people like about the product and what they don’t like about it. Especially when people are complaining about stuff, there’s a lot of opportunity there to come out with a similar version that fixes those pain points.

It’s going to vary for any market, but those are a couple that can be effective.

Felix: Okay, cool. Obviously a unique product like you were talking about would do much better than a private-label product where it doesn’t have any enhancements at all. What about specific industries? Do you find that there are specific industries or specific categories that tend to do better on Amazon than others?

Andrew: I’m sure there are. I don’t know. I haven’t seen the data enough across categories to know which ones do better. You can buy just about anything on Amazon now. I’m sure there are, but I haven’t seen that to be able to definitively say one way or another.

Felix: Got you. Cool. When you think about a seller’s strategy or approach to entering the market, does it always make sense to start on Amazon or is this something that you should expand onto later? What order of marketplaces should you enter? Start with your own and then enter into Amazon or start on Amazon and then eventually [inaudible 00:10:46] out your own property? What are your thoughts on that?

Andrew: It’s a good question. I think it depends on the market and your product line. I’ll give a high-level vague answer, and then give you one that’s a little more concrete.

Felix: Sure.

Andrew: If you’re selling something that’s really hand-crafted and the story is tied you a lot into that and your website experience is instrumental to selling that product, you probably want to get your website up first or at least a really solid version of that. I’d say in most cases, in 2017, getting something up on Amazon, especially if you have your own proprietary line or at least branded line, that is where I would start for a couple of reasons.

One, you can get going faster. You don’t have to build a website from scratch. You don’t have to figure out as much of the traffic issue. You’ve got traffic built it, at least now on the search side. You can get traction more quickly with Amazon, which can help you get feedback more quickly. It can help you start moving product more quickly. Early on in the adventure, getting some early traction is important, so that would, for most cases, I would say start on Amazon with an emphasis on being, don’t get so caught up with, if you do get traction, you do succeed on Amazon, you totally neglect your own proprietary brand and site. That’s going to be harder to build up. It’s going to take more work. You don’t have the traffic source built in, but if you want to build something more defensible that’s safer, less risky long-term, and have control of your customers, that’s going to be the better place.

A long of way of saying it depends, but I would probably go Amazon first and then start building up your own presence.

Felix: That makes sense that you’re able to get a lot more traction early on because you don’t have to focus so much on the traffic acquisition because Amazon has that built in, in traffic. Once you do have both of these running, where you have your own Amazon store and then your own store or maybe not even Amazon but some other sales channel that you’re working with, it then becomes, your problems are not necessarily double, but your business does become more complex now that you have multiple sales channels. Based on your experience or experience that you heard from others, are there any ways to help balance and manage these multiple sales channels that you’re not operating in if you have Amazon or another marketplace, plus your store?

Andrew: How to make it a little bit easier to sell on all of these multiple channels, is that what you’re asking?

Felix: Yeah. For sure.

Andrew: I think one of the big issues you have is you do run into managing different order flows coming in. To make it easy, let’s say you’re just selling on Shopify and selling on Amazon. You’ve got orders coming in from multiple places. You have inventory issues. Depending on if you’re doing FBA or if you’re doing Fulfilled by Merchant, where you sell on Amazon, but you actually package up the item and ship it out. One thing that could help a lot is getting some software, a kind that’s called an ERP or ERP-type system, so something like Ship Station, Skubana, Ordoro, something like that. We could probably do a whole episode on what those different things do in integrating them into your store, but at high level, they help you manage orders from multiple sources, so you’ll have a single dashboard for your Shopify orders and your Amazon orders. They’ll be able to sync up your inventory, so if you’re selling on Shopify, Amazon, and eBay, and you run out of product, which is X, that information gets disseminated out to all the platforms, so you don’t sell a bunch of stuff you don’t have. That would be the big thing I would think about.

Felix: What I’ve seen some brands and maybe even some stores that are selling multiple products do is that when they launch at Amazon, they discount it heavily or they have some kind of coupon code just to build that velocity that you’re talking about. Have you seen this in your experience as well? What are your thoughts on that approach?

Andrew: Again, I think I have seen people do that before. Are you talking, Felix, are you talking about just to build the velocity or for generating reviews or for both?

Felix: It seems to be fore both where they’re trying generate the velocity but then also asking people to leave a review, of course. Then, I’m sure that helps as well with your rankings.

Andrew: Yeah, so definitely I’ve seen some people do it on the discounted front just for velocity. I’ve probably seen more people historically do it with reviews, where you offer a very deep discount, bordering on giving the product away for free to generate reviews. The problem is the last September-ish, this Fall, Amazon really cracked down on that. Incentivized reviews, at least the way most people have done them, aren’t allowed anymore, so yeah, I have seen that, more on the review side though, but you can’t do it with reviews quite as much.

Felix: Yeah. I’ve seen that happen too. Just in seeing how that’s going to affect their review systems. It’s peer-dependent on it pretty heavily. Even when I do buy a product from a brand from their store directly, I will go over to Amazon just to look at the reviews first. It’s almost like you’re doing research on Amazon a lot of the times. I’m interested in seeing how brands can react to that.

Andrew: It will be. I think looking at what people are going to do without … Because that was kind of the bread and butter, kind of the old original how-to-launch-your-product-on-Amazon was get your product, get it put online, prime the pump, so to speak, with 10 or 20 incentivized reviews, and then some people would do those long-term forever. Most of the people, the savvier entrepreneurs I knew wouldn’t do that because you can tell. You can land on a Amazon page, and you know when 90% of them are incentivized reviews. It kills confidence. At the same time, reviews were crucial for getting that initial traction. A lot of times, people would get 10 or 20 incentivized ones and then build organically on top of that.

Going forward, it’ll be interesting. Amazon actually has something called the Amazon Early Reviewer Program, where, more or less, it’s the same thing as incentivized reviews, but Amazon is running it. They’ll pay people $1-$3, I think, for leaving a review. Of course, they can actually control it. They know that they’re not going to penalize people if they leave a bad review. That’s something that might be a potential alternative. There’s Vine, which is Amazon’s review program. If you want to take advantage of that, I think you have to be a Vendor Central. You have to sell in wholesale bulk to Amazon, which is not for everybody. I think ultimately, it’s good for the ecosystem. Also in that it’s going to make people make better products, right? Which, in the long run, is not a bad thing.

Felix: Yeah. For sure. Speaking of incentivized reviews where you’re a consumer and you see obviously that there’s some bias going on, some kind of stuffing of the ballot, I guess, to try to get that early traction, is going to lead to a pitfall, later on, like you’re saying, because people are going to recognize this. People aren’t dumb, and they can obviously see there’s some kind of trend or something going on behind the scenes. Do you know of any other pitfalls, especially that you see some entrepreneurs run into when they’re launching on Amazon or running a business on Amazon?

Andrew: Yeah. I think one of the big things is not keeping enough inventory in stock. This is something that happened to me. Launched a product on Amazon. It’s tough because you launch a new product, you’re trying to balance two things. You’re trying to balance your downside risk if it doesn’t sell. You’re also trying to balance the risk that it does sell very well and you run out of stock. If you run out of stock on Amazon, it just destroys. We were just talking about how sales velocity is what helps with your rankings. That kills your momentum. If you can think about climbing a mountain, you run out of stock, any progress you’ve made in the rankings is you fall all the way back down to the bottom, so that’s a big one because it takes a long time to place a new order and get it back to your fulfillment center or fulfilling yourself. That’s one.

I think running into issues with cash flow is another one. A lot of people, especially if you’re making something proprietary, people underestimate how much cash a successful product business on Amazon consumes. If you’re growing, and you sell out of 1,000 quantity, and your next order has to be for 2,000 or 3,000, you’ve got to front the cash for that, anywhere from 3–6 months before you can recoup it. You can be selling your stuff like gangbusters and have a major cash crunch. That’s another issue I see.

I think a lot of people still are thinking they can sell me-too products, where they can just … because there’s all this hype around Amazon being a gold rush and there’s so much money to be made. I think the days of being able to throw up a product that’s not differentiated, that’s not unique, and be able to make it, make money, just are over. Even if you’re doing it on a private label front, that’s getting a lot harder.

Those are some of the, I think, the pitfalls I see people falling into.

Felix: It sounds like a lot of it comes back to just managing your own expectations better and going to one of them is managing that inventory, the inventory projections a lot better. Obviously, Amazon is going to be one of the big ones that can eat up a lot of inventory, but again, if you’re on other marketplace or maybe even just launching your product for the first time, getting that projection down right is very important. Through your years of experience managing inventory, are there ways to project better? Are there ways to have data, to understand how much inventory you should be having on hand?

Andrew: Yeah. To be totally candid, my experience with managing inventory on Amazon is pretty limited, due to a little bit of selling, but not nearly as much as … The number of SKUs is pretty limited. You can inventory management where you’ve got dozens of SKUs across lots of products. That’s where it gets a lot tricker. Yeah, there’s definitely software out there that can help you do that, but I personally don’t have any experience using some of that more in-depth software, but it is available, and it can be very helpful.

Felix: Cool. Speaking of selling out too much, I think one of the keys, I think people always think that’s a great problem to have, you’re selling a product, good problem to have. In order to do that, I think one of the keys is to have a high-converting product page, to make a product page that gives all the customers exactly what they’re looking for but not too much, don’t want to be overwhelming. Based on your experience or based on what you’ve seen, what are some keys to having a high-converting product page on Amazon?

Andrew: A lot of them, I think, are fairly straightforward, but it’s amazing how many people don’t do them. I was looking at couple, a product yesterday on Amazon that probably failed on 3 out of the 4 of these. First one is, I think probably the biggest ones is just awesome images. High res, well-done images that show all the aspects and facets of your product. That’s huge. Also just making sure that you can enhance them as well. I think it’s pretty helpful sometimes seeing the benefit-driven logos or tags that help you explain, that help explain the visual aspects of a product. Images are huge.

A solid benefit-driven copy is more important than you think. Getting in there and really spending a lot of time on that copy. Solid copy always sells really well.

Reviews are enormously, I think for me like … Felix, do you shop on Amazon a whole lot?

Felix: A lot. Yeah.

Andrew: Yeah. I do a decent amount as well. A lot of times when I’m scanning a category page, before you look at the copy, before you look at the images, maybe you see a thumbnail, but it’s tiny, right? You’re going to see two things. I scan off of them. One is the title. An important title that really focuses on why your product is different. What it is and why it’s different, I think is crucial. Then secondly are the reviews that you have. Those are the two things I scan for, and Prime. I always check the FBA box. Those are the 3 things at a high-level category I look for. We talked about reviews. Reviews are, it’s got no more difficult to do those. Those are a fairly large facet of it too.

Those would be the main elements, I would say, that you really look to focus on for a high-converting, well-selling product.

Felix: Yeah, whenever I shop on Amazon, if I already know or are familiar with the product, familiar with the competitors, alternatives for the product, I would just look at the title, like you’re saying, maybe glance quickly at the photo, but I go straight down to look at the most helpful reviews, a positive and negative. The reviews, most of the time, will sell me enough that I don’t even bother going back to read the product description just because I’m already familiar with it, it’s supposed to do, and as long as the reviews, especially if the reviews are saying that they used that product specifically to solve the same problem I have, it’s golden for me. I’m going to buy it without even having to read any more from the seller directly, so definitely vital.

One thing I’ve been seeing is that on some Amazon listings, there’ll be a Q&A section but then also the opportunity for sellers to respond to comments, respond to reviews themselves. What are your thoughts on this, whether it be on Amazon or anywhere public, when customers are leaving feedback, positive and negative? What’s your experience been with answering these or replying to these kinds of comments and reviews?

Andrew: I haven’t heard a whole lot of talk about if it definitively plays into Amazon’s algorithm with how well you rank. I don’t know if anyone can answer that apart from if we can get an insider, Mr. Bezos or something, but I think in just general practice on Amazon or your own site, it’s really important. To me, it’s a signal that the seller of this product is engaging with the buyers and cares about what people think about the product. It’s nothing but a good sign unless you get on there and you rail against people. Empathizing with problems, thanking people for their suggestions, thanking them for buying it, anything like that. Yeah, I can’t see it as anything other than a good thing and potentially, even a potential small, it could be something that ties into the ranking as well.

One other thing, just a little aside that you mentioned about building a high-converting product page, one thing I forgot to mention was one thing that’s cool about Amazon is you can get in, they have, Amazon has this own built-in traffic, kind of paid traffic system, kind of like AdWords but it’s within the Amazon ecosystem. You can get in there, and you can run paid advertisements where Amazon will just send paid traffic to your product page. You bid on it just like you would, you can say I bid $2 a click or whatever it is. You can run it and collect data and after a couple of months, you can see what people, what search terms are driving the most profitable traffic. You can see which terms, which keywords convert the best and which don’t. You can optimize your campaign.

It’s not something you can do out from day one, but over time, if you invest a little bit in paid traffic, you can really, just like you would with Gladwords, be able to optimize each product and each campaign for what converts the best. That’s another great way to be able to boost those conversion pages.

Felix: That’s a great idea that it’s not just to try to get that conversion right off the bat, but just to use it to collect data, then you can use to improve your product page and get that organic conversions. Cool.

I want to switch topics a little bit and talk about something you mentioned earlier, which was FBA. Fulfilled by Amazon. Can you say a little bit more about this? What kind of businesses have you seen have success using Amazon’s FBA program?

Andrew: I’d say probably 75% plus, if not 85–90% of people that I know that are seriously investing resources into Amazon are on FBA. It just makes it, from a seller’s perspective, it’s hugely advantageous to be able to send in all your stuff and have Amazon do the heavy lifting in terms of storage and fulfillment. On the buying side, like we were talking about, Felix, it’s a filtering metric I use. We live in a world now, thanks to Amazon, where 2 days is a long time to wait for your package, right? It gets things to your customers more quickly. I’d say most people are using it. Did you ask when it makes sense to use and when it doesn’t?

Felix: Yeah, I think that’s a great follow-up question is that is it something that you should get into right away when you are launching on Amazon to go through FBA or something you tack on or improve towards later?

Andrew: You could wait. I don’t necessarily know why you’d want to. It’s fairly easy to get stuff sent in. There’s a huge benefit in terms of conversion when you’re using FBA. Most of your competitors are going to be, even if it’s not for a direct product, people are going to be comparing. You’re listing against others that they can get immediately for free. There are some cases where maybe it doesn’t make sense, but in the vast majority, I would stay start from scratch. The only times I think it maybe doesn’t make sense is if you’re shipping enormous massive products, but then that’s probably not something you want to be doing anyway, so I’d say yeah. Most of the time, 90% plus, I’d start off with FBA out of the gates.

Felix: Very cool. Speaking of FBA, we mentioned earlier that over the last few years, there’s been a huge push in private labeling and using FBA to launch in Amazon. We talked a little bit earlier about incentivized reviews also being a way to kick start and build that early traction when you’re launching on Amazon. These are obviously trends that we’ve seen pop up but then also now starting to enter more of a crunching phase. Obviously with the reviews, you can no longer do that. Private labeling is becoming much more competitive. Are there other trends that you’ve seen on Amazon go through this cycle to where it’s maybe on a downturn, where you might not want to invest your next couple years pursuing?

Andrew: Those would be the big ones. We kind of covered them. The me-too private label phase and then the incentivized reviews phase. Those are the big ones that I see. I think the other one that probably is going to make a little bit more, again, we touched on this already as well, maybe become something that you hear more of this year, is just the danger of building your brand entirely on Amazon. I think it’s probably going to get more common. There’s a ton of, of course, there’s an amazing amount of opportunity to be had there, but you do want to be careful. Like anything, you don’t want to put too many of your eggs in one basket. I think having a good strategy where … The last 2–3 years, people have seen their businesses, in some aspects, blow up with Amazon, which is awesome, but taking that long-term approach, making sure that you also have a long-term plan to make sure you also have your own website that can supplement that, I think that’ll be something that people emphasize more, I think, in 2017.

Felix: Speaking of that, are there any other rising opportunities that you see happening maybe in the early days with Amazon that, again, first-time entrepreneurs or entrepreneurs that are thinking about launching into Amazon should consider pursuing?

Andrew: Yeah. One thing it’s called Enhanced Brand Content. It’s something that Amazon’s rolling out here where you can add videos to a product page, where you get more room to create your own custom area, just like you would on your own site to be able to sell and display your products. Traditionally, that’s been … We’ve all went into Amazon and seen videos and really deluxe product listings. Normally, those are reserved for people who either are on Amazon Exclusives, which is a program that is a selective program where Amazon brings in certain brands or for people who were selling products exclusively to Amazon wholesale, so how they have a vendor account with them, but this Enhanced Brand Content, something that it’s getting rolled out by Amazon for regular sellers. It lets you be able to do all the things that I mentioned.

For now, I think in the early stages, I think it’s free. They may charge in the future, but that’s something where, especially as it rolls out and not everyone is taking advantage of that, that’s something I think that could give you a competitive advantage and a leg up over competitors who may to be aware of it or not implementing it out of the gates.

Felix: Very cool. One other I think really popular move I think 2016 was a big year for it, but things have slowed down for it because again [inaudible 00:32:11] the Amazon print-on-demand was a huge thing. I was seeing everywhere where there were a lot of case studies out there about how easy it was to essentially launch a merchandise brand on Amazon. Have them printed, have them, it goes through the FBA program as well, so you don’t touch inventory at all. You get a lot of traffic, again, from Amazon. That’s slowed down because I believe Amazon has on invite-only mode right now, and they’re maybe 6-month waiting list. You don’t have much experience with that, but you did say that mentioned to me before today about how you have some experience or were doing some research on outsourced print fulfillment. Can you tell us a bit more about this? What’s your experience with that, whatever you’ve been able to find with that particular business model?

Andrew: This is something where in terms of research just the [inaudible 00:32:59] doing some research about starting up an on-demand printing art business for some stuff. Take this with a grain salt because it has not been … Again, 2–3 hours over a beer vs 3 weeks of in-the-trenches stuff. I was looking at Printful, which has kind of has the same model as Amazon Merchandise-on-Demand. I think it’s, not sure exactly how the pricing looks on the Amazon side. For Printful, it seemed like the margins were fairly small. There’s a lot of convenience to it, but you’d have to move a lot of product to be able to make it make sense.

Also there’s some downsides on potentially, anytime you outsource something, you’ve got some potential quality issues. Especially when the primary medium is T-shirts, your art, that could be something that can cause some problems. It was something I thought about doing as a fun little experiment, but after reading some reviews and some case studies from people who had tried it, who had tried the outsourced fulfillment model in terms of the printing and the graphics and then brought it in-house and also the pricing that you get when you hook it up directly, it would be, I think I still might try it long-term or initially because there’s low, it’s very inexpensive to test out of the gates if I want to try a business like that. I think they’re, medium to long-term, there’s probably some good advantages to bringing that kind of stuff in-house because you have more control, your economics are better. It’s not as convenient, but once you scale, there’s some benefits to be had by bringing it a little bit closer under your thumb.

Felix: You mentioned that you had to be running large numbers for print-on-demand or outsource print fulfillment to make sense. Can you say more about this? Is it because of the smaller margins?

Andrew: Yeah, and again, this is just … I didn’t do a ton of comparison shopping here but the services I was looking at, you sell a printed hoodie for 40 bucks and they wanted 30 bucks for it, then you got shipping. You got to sell a lot of hoodies, making $10 on a $45 item to make it pencil out. It struck me as fairly low margins for the customizations and the stuff you were doing. Again, I don’t blame them if I was running business like that. They’re making it as easy as possible, but just the economics behind it made me think you got to sell a lot of hoodies to build up a good-size business with that profit model.

Felix: For sure. It makes sense. Awesome. Thanks so much for your time, Andrew. Lots of great information about how to be successful on Amazon. Again, Andrew runs eCommerceFuel.com and eCommerceFuel podcast. Highly recommend you check that out. What are your plans? Because we were saying before, you sold off your Red Channel Radios, which we talk a lot about in the previous episode we recorded with you. What are you focused on in 2017?

Andrew: Good question. I actually, to be honest with you, I’m not 100% sure. I’m looking over a couple of things. I’m in this, for the last, sold the business 6 months ago, in the last 6 months since then, really focused on running our private event and doing a big massive overhaul of our community. For the first time in a while, I had the chance to catch my breath. I don’t have a good answer for you. I’m looking at potentially getting another business up and running off the ground. Also looking potentially on maybe thinking about focusing in on a community and trying to be a facilitator for our merchants there full-time to serve them really well. I don’t know. I’m kind of excited. I’m just as curious as you are.

Felix: Awesome. Definitely check out eCommerceFuel.com, the podcast as well to stay up-to-date with Andrew. Where else would you recommend listeners follow along with to see what you’re up to?

Andrew: ECommerceFuel.com. The podcast, like you mentioned, on iTunes. Twitter @youderian or @eCommerceFuel. Those are the places where you can pretty much figure out anything I’m up to.

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About the author

Felix Thea

Felix Thea is the host of the Shopify Masters podcast, the ecommerce marketing podcast for ambitious entrepreneurs. Got something to share with Shopify Masters listeners? You can submit your story for consideration.